1. What is Per Diem?

Per Diem refers to the daily interest amount on a loan. It represents how much interest accrues each day based on the loan amount and interest rate.

2. How Does the Calculator Work?

The calculator uses the per diem formula:

Where:

• \( Loan \) — The principal loan amount in USD
• \( Rate \) — The annual interest rate in decimal form
• 365 — Number of days in a year

Explanation: The formula calculates the daily interest by multiplying the loan amount by the annual rate, then dividing by 365 days.

3. Importance of Per Diem Calculation

Details: Calculating per diem helps borrowers understand their daily interest costs, which is particularly important for short-term loans or when making early payments.

4. Using the Calculator

Tips: Enter the loan amount in USD and the interest rate in decimal form (e.g., 5% = 0.05). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 365 instead of 360?
A: While some institutions use 360 days, this calculator uses 365 for more precise daily calculations in a standard year.

Q2: Does this account for compound interest?
A: No, this calculates simple daily interest. For compound interest, the calculation would be more complex.

Q3: How accurate is per diem for loans with changing balances?
A: Per diem changes as the principal balance changes. This calculation assumes a constant principal.

Q4: Can I use this for mortgage loans?
A: Yes, though mortgage interest is typically calculated monthly. This gives you the daily breakdown.

Q5: What if my loan uses actual/365 or actual/360?
A: This calculator uses 365 days. For actual day counts, you would need to know the exact number of days in the period.